e7-17195

[Federal Register: September 4, 2007 (Volume 72, Number 170)]

[Rules and Regulations]

[Page 50645-50647]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr04se07-3]

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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 30

Foreign Futures and Options Transactions

AGENCY: Commodity Futures Trading Commission.

ACTION: Amended Supplemental Order for Expanded Relief.

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SUMMARY: The Commodity Futures Trading Commission (``Commission'') is

issuing an Amended Supplemental Order authorizing members of Singapore

Derivatives Trading Ltd (``SGX''), formerly known as Singapore

International Monetary Exchange Ltd (``SIMEX''), to solicit and accept

orders from U.S. customers for otherwise permitted transactions on all

non-U.S. exchanges where such members are authorized by the laws of

Singapore to conduct futures business for customers. The Amended

Supplemental Order is issued pursuant to Commission Regulation 30.10,

which permits the Commission to grant an exemption from certain

provisions of Part 30 of the Commission's regulations, and supersedes

the Commission's prior Supplemental Order dated September 9, 1999.

EFFECTIVE DATE: September 4, 2007.

FOR FURTHER INFORMATION CONTACT: Lawrence B. Patent, Deputy Director,

or Andrew Chapin, Special Counsel, Division of Clearing and

Intermediary Oversight, at (202) 418-5430, Commodity Futures Trading

Commission, Three Lafayette Centre, 1155 21st Street, NW., Washington,

DC 20581. Electronic mail: [email protected] or [email protected]

SUPPLEMENTARY INFORMATION: The Commission has issued the following

Order:

Amended Supplemental Order Granting Expanded Relief Pursuant to

Commission Regulation 30.10 for Otherwise Permitted Transactions on All

Non-U.S. Exchanges Where Firms Designated by the Singapore Derivatives

Trading Ltd Are Authorized by Exchange Regulations To Conduct Futures

Business for Customers, Subject to Certain Conditions

On December 30, 1988, the Commission issued an Order granting

relief under Regulation 30.10 authorizing designated members of SGX to

solicit and accept orders from customers located in the U.S. for

otherwise permitted transactions on the Exchange.\1\ On September 9,

1999, the Commission issued a Supplemental Order expanding the relief

to include otherwise permitted transactions on Eurex Deutschland.\2\ By

letter dated November 30, 2006, SEL petitioned the Commission on behalf

of SGX to amend the Supplemental Order to permit members designated by

SGX to solicit and accept orders from foreign futures and options

customers \3\ for otherwise permitted transactions on all non-U.S.

exchanges \4\ where Exchange Members are authorized by Singapore law to

conduct futures and options business for customers, subject to SGX and

SGX Members' continued compliance with the terms of the Original Order

and with certain specified conditions.\5\

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\1\ 54 FR 806 (January 10, 1989) (``Original Order'').

\2\ 64 FR 50248 (September 16, 1999) (``Supplemental Order'').

In December 1999, SIMEX merged with the Stock Exchange of Singapore

to form a holding company named the Singapore Exchange Limited

(``SEL''). SIMEX was renamed SGX and currently operates two

exchanges as a wholly-owned subsidiary of SEL. The first market,

called SGX-DT, is dedicated to trading financial futures and option

contracts. The second market, called JADE, is the result of a joint

venture with the Chicago Board of Trade, Inc., to trade commodity

futures and option contracts.

\3\ The term ``foreign futures or foreign options customer''

means any person located in the U.S., its territories or

possessions, who trades in foreign futures or foreign options.

\4\ The term ``non-U.S. exchange'' refers to a foreign board of

trade which is defined in Commission Regulation 1.3(ss), 17 CFR

1.3(ss) as: Any board of trade, exchange or market located outside

the United States, its territories or possessions, whether

incorporated or unincorporated, where foreign futures or foreign

options transactions are entered into. Thus, contracts that are

traded on a market that has been designated as a contract market

pursuant to section 5 of the Commodity Exchange Act (``Act'') are

not within the scope of this Order.

\5\ Letter dated November 30, 2006, from Arul Ramiah, Head,

Regulatory Policy for SEL, to Ananda K. Radhakrishnan, Director,

Division of Clearing and Intermediary Oversight.

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On occasion, the Commission has issued Regulation 30.10 orders and/

or supplemental orders that permitted members of an exchange with

confirmation of Regulation 30.10 relief to trade on behalf of U.S.

customers on other authorized or designated exchanges outside the

jurisdiction of the Regulation 30.10 recipient.\6\ To ensure that U.S.

customers receive adequate protection for transactions intermediated by

non-U.S. persons on or subject to the rules of a foreign exchange

located outside the jurisdiction of a Regulation 30.10 recipient, the

Commission requires the jurisdiction to which the Regulation 30.10

order is directed to demonstrate that such transactions will be

regulated as if they were executed on an exchange located within the

recipient's jurisdiction.\7\ To make this demonstration, the Regulation

30.10 recipient must: (1) Prohibit its regulatees or members from

intermediating otherwise permitted transactions for U.S. customers on

unapproved foreign exchanges as set

[[Page 50646]]

forth under local law, and must specify which exchanges are authorized

by local law; (2) represent that regulatees or member firms with U.S.

customers will comply with all the terms and conditions of the original

Regulation 30.10 Order with respect to transactions entered into on or

subject to the rules of a foreign exchange located outside its

jurisdiction; and (3) confirm that it has the authority and the ability

to enforce its laws, rules and/or regulations with respect to those

transactions to the same extent that it conducts such activities on an

exchange located within its jurisdiction. The Regulation 30.10

recipient also should specify in its application if there does not

exist a specific statute or regulation setting forth a list of

authorized or recognized exchanges.\8\

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\6\ See, e.g., 71 FR 40395 (July 17, 2006) (authorizing members

of the Sydney Futures Exchange (``SFE'') to solicit and accept

orders from U.S. customers for otherwise permitted transactions on

all non-U.S. and non-Australian exchanges where such members are

authorized by the regulations of the SFE to conduct futures business

for customers).

\7\ 64 FR at 50251.

\8\ Id. at n.20. See, e.g., 67 FR 30785 (May 8, 2002)

(authorizing members of Eurex Deutschland (``Eurex'') to solicit and

accept orders from U.S. customers for otherwise permitted

transactions on all non-U.S. exchanges where such members are

authorized by Eurex regulations and German law to conduct futures

business for customers).

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Upon due consideration, the Commission has determined to issue this

Amended Supplemental Order permitting SGX Members to which Regulation

30.10 relief has been confirmed by the Commission or by the National

Futures Association (``NFA'') to solicit and to accept orders from U.S.

customers for otherwise permitted transactions in commodity futures and

commodity options (including options on futures) on or subject to the

rules of any non-U.S. exchange where such members are authorized by the

laws of Singapore to conduct futures business for customers.

The expanded Regulation 30.10 relief provided under this Amended

Supplemental Order, however, is contingent on the SGX members'

continued compliance with the Original Order, and the SGX's and SGX

Members' compliance with the following conditions:

(1) SGX will carry out its compliance, surveillance and rule

enforcement activities with respect to solicitations and acceptance

of orders by designated Exchange Members of U.S. customers for

futures and options business on all non-U.S. exchanges where such

members are authorized by the laws of Singapore to conduct futures

business for customers to the same extent that it conducts such

activities in regard to SGX business;

(2) SGX will cooperate with the Commission with respect to any

inquiries concerning any activity which is the subject of this

Amended Supplemental Order, including sharing the information

specified in Appendix A to the Part 30 regulations, 17 CFR Part 30,

on an ``as needed basis,'' on the same basis as set forth in the

Original Order;

(3) Each SGX Member firm confirmed for relief under the Original

Order seeking to engage in activities that are the subject of this

Amended Supplemental Order must agree to provide the books and

records related to such activities required to be maintained under

the applicable SGX rules and laws in effect in Singapore on the same

basis as set forth in the Original Order;

(4) SGX members who apply for confirmation of Regulation 30.10

relief with the National Futures Association must provide and

maintain a list of the foreign exchanges where they intend to engage

in transactions on behalf of U.S. customers pursuant to relief

granted by this Amended Supplemental Order and must agree to abide

by the terms and conditions of the Original Order; and

(5) SGX will continue to comply with the terms of the Original

Order with respect to transactions effected for U.S. customers on

SGX.

As set forth in the Commission's September 11, 1997 Order

delegating to NFA certain responsibilities, the written representations

set forth above shall be filed with NFA.\9\ Specifically, SGX Members

applying for confirmation of Regulation 30.10 relief subsequent to the

issuance of this Amended Supplementary Order must submit

representations to NFA consistent with condition (3) of this Order, and

the list of foreign exchanges required by condition (4), as well as

representations required by the Original Order. SGX Member firms that

currently operate under the Original Order will be deemed to have

consented to condition (3) by effecting transactions pursuant to this

Amended Supplemental Order. Each firm seeking relief hereunder has an

ongoing obligation to notify NFA should there be a material change to

any of the representations required in the firm's application for

relief, including any change in the list of foreign exchanges referred

to in condition (4).

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\9\ 62 FR 47792, 47793 (September 11, 1997).

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The expanded Regulation 30.10 relief provided by this Amended

Supplemental Order remains subject to the existing product restrictions

under the Act and Commission regulations thereunder including those

related to stock indices, foreign government debt and foreign security

futures products.\10\ The expanded Regulation 30.10 relief provided

under this Amended Supplemental Order also is contingent upon the

continued compliance by the Monetary Authority of Singapore (``MAS'')

with the terms and conditions of the information sharing arrangement

with the Commission regarding the Regulation 30.10 activities of the

SGX members.\11\

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\10\ See, e.g., Sections 2(a)(1)(C), (D) and (E) of the Act.

\11\ Letter from Neo Boon Sim, Head, Market and Clearing Houses

Division, MAS, to Ananda K. Radhakrishnan, Director, Division of

Clearing and Intermediary Oversight, dated June 11, 2007. The

Commission signed a bilateral Memorandum of Understanding (``MOU'')

with MAS on May 16, 2000 concerning Consultation, Co-operation and

the Exchange of Information (concluded jointly with the U.S.

Securities and Exchange Commission). In addition, MAS also is a

signatory to the IOSCO Multilateral MOU.

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This Amended Supplemental Order is issued based on the information

provided to the Commission and its staff. Any changes or material

omissions may require the Commission to reconsider the authorization

granted in this Amended Supplemental Order.

List of Subjects in 17 CFR Part 30

Commodity Futures, Commodity Options, Foreign Futures and Options.

0

Accordingly, 17 CFR part 30 is amended as set forth below:

PART 30--FOREIGN FUTURES AND FOREIGN OPTIONS TRANSACTIONS

0

1. The authority citation for part 30 continues to read as follows:

Authority: 7 U.S.C. 1a, 2, 4, 6, 6c and 12a, unless otherwise

noted.

Appendix C to Part 30--Foreign Petitioners Granted Relief From the

Application of Certain of the Part 30 Rules Pursuant to Sec. 30.10

* * * * *

0

2. The citation ``Firms designated by the Singapore International

Monetary Exchange Limited'' is to be revised as follows:

Firms designated by the Singapore Derivatives Trading Limited.

* * * * *

FR date and citation: [insert date of this release], 72 FR

[insert number of page on which this release begins].

* * * * *

0

3. The following citations are to be added:

Firms designated by the Taiwan Futures Exchange.

FR date and citation: March 28, 2007, 72 FR 14413.

Firms designated by the Tokyo Commodity Exchange.

FR date and citation: February 9, 2006, 71 FR 6759.

Firms designated by the Bolsa de Mercadorias & Futuros.

FR date and citation: July 8, 2002, 67 FR 45056.

Firms designated by Eurex Deutschland.

FR date and citation: May 8, 2002, 67 FR 30785.

[[Page 50647]]

Issued in Washington, DC on August 24, 2007.

David Stawick,

Secretary of the Commission.

[FR Doc. E7-17195 Filed 8-31-07; 8:45 am]

BILLING CODE 6351-01-P

Last Updated: September 4, 2007